Czech industry emits mixed message on emissions

Czech industry has given a mixed reaction to the latest European Commission
climate change proposal, a swansong package which leave several key
questions up in the air.

Photo: Tomáš Adamec
The Czech Republic makes heavy use of fossil fuels, partly local brown coal
and partly imported oil and gas; has one of the highest EU proportions of
manufacturing industry, and has seen relatively low development of
renewable power.

Renewables are almost a swear word in most industrial and political
company. The local solar power boom, fueled by poorly drawn up local
legislation that robbed the poor to pay the rich, has left a deep and
widespread Czech animosity to new European initiatives on climate change.

So, the European Commission’s unveiling Wednesday of plans for the next
round of moves to cut the continent’s carbon footprint and boost
renewables without, in theory, doing too much damage to heavy industry or
collapsing electricity grids, was very closely watched indeed.

The eventual batch of follow on targets and goals for 2030 has met with a
mixed local reaction. Generally speaking, large chunks of industry, who
don’t believe that Brussels should be poking its nose in here anyway,
have denounced the package. State owned power utility ČEZ seems pretty
happy and, almost inevitably given the former, most Green groups are
disappointed with what they see as modest ambitions to tackle climate
change and concessions made to big companies.

The flagship goal coming from the Commission is to cut greenhouse gas
limits to 40% of 1990 levels within 17 years. The existing target for 2020
is a 20% reduction. The new Europe-wide target for use of renewables is 27%
of total energy needs by 2030, up from 20%, but specific national goals
have not been included this time round.

How the overall European target for renewables can be met without the sort
of constraints on national governments that now apply appears a mystery.
The Czech Ministry of Industry and Trade should be happy, at least
temporarily. It took the lead in saying there should be no new national
targets, arguing that the country’s renewable power potential will be
reaching its limits by 2020. Nonetheless, Some Green groups say they still
expect some sort of framework setting national goals or targets to be
sketched out later.

Czech heavy industry blames the existing renewables targets for sharp
rises in electricity prices which, if continued, will drive them to the
wall. Local electricity prices have surged in the last five years from
below the EU average to above it with the renewables surcharge a major
factor.

ČEZ has one main reason to be cheerful: the fact that the Commission
proposes to continue its carbon emissions trading market on reformed lines
that should renew the lucrative cash flow to the company. Those earnings
have been depressed because of low emissions prices.

Actually, the Commission’s proposals to reform the EU’s emissions
trading system after 2020 bear a startling similarity to those that ČEZ
itself has been pushing over recent weeks. Basically, it would allow the
Commission to hold back allowances if there appears to be a glut of them on
the market, for example, because of economic slowdown affecting industrial
companies that need to buy these pollution permits.

This is, probably, the current Commission’s last big swansong proposal
before it bows out later this year. Bolstered up or not, the proposal still
has to win approval from heads of government and a newly elected European
Parliament. That means it’s far from clear whether the Commission will be
going out with a bang or a whimper.